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Note 27: Long-term borrowings

  Group   Company
£ million 2010 2009   2010 2009
a  Current
Bank and other loans* 139 69 126 57
Finance leases** 129 103 140 115
Hire purchase arrangements 288 517   288 517
At 31 March 556 689   554 689
b  Non-current
Bank and other loans* 1,345 779 1,062 582
Finance leases** 2,077 1,979 2,246 2,156
Hire purchase arrangements 24 316 24 316
Loans from subsidiaries       366 279
At 31 March 3,446 3,074   3,698 3,333

*Bank and other loans are repayable up to the year 2019. Bank and other loans of the Group amounting to US$231 million (2009: US$108 million), €73 million (2009: €nil), ¥45,474 million (2009: ¥6,915 million) and £350 million (2009: £382 million), and bank loans of the Company amounting to US$81 million (2009: US$108 million) and €73 million (2009: €nil) and ¥45,474 million (2009: ¥6,915 million) and £154 million (2009: £172 million) are secured on aircraft. Euro-sterling notes, other loans and loans from subsidiary undertakings are not secured. Finance leases and hire purchase arrangements are all secured on aircraft or property, plant and equipment.

**Included in finance leases for the Company is £180 million (2009: £188 million) of finance leases with other subsidiaries of the Group, of which £11 million (2009: £11 million) is classified as current.

c  Bank and other loans

Bank and other loans comprise the following:

  Group   Company
£ million 2010 2009   2010 2009
£350 million fixed rate 5.8 per cent convertible bond 2014 (i) 269 269
£250 million fixed rate 8.75 per cent eurobonds 2016 (ii) 248 248 248 248
Floating rate sterling mortgage loans secured on aircraft (iii) 175 187 132 143
Floating rate US dollar mortgage loans secured on aircraft (iv) 54 76 54 76
Fixed rate sterling mortgage loans secured on aircraft (v) 175 194 21 29
Floating rate Japanese yen mortgage loans secured on aircraft (vi) 321 49 321 49
Floating rate US dollar mortgage loans secured on plant and equipment (vii) 40 49 40 49
Fixed rate euro mortgage loans secured on aircraft (viii) 65 65
Fixed rate US dollar mortgage loan secured on aircraft (ix) 99
European Investment Bank loans secured on property (x) 38 45   38 45
  1,484 848 1,188 639
Less: current instalments due on bank loans 139 69   126 57
At 31 March 1,345 779   1,062 582

(i)  £350 million fixed rate 5.8 per cent convertible bond, raising cash of £341 million (net of issue costs), convertible into ordinary shares at the option of the holder, before or upon maturity in August 2014. Conversion into ordinary shares will occur at a premium of 38 per cent on the Group’s share price on the date of issuance. The Group hold an option to redeem the convertible bond at its principal amount, together with accrued interest, upon fulfilment of certain pre-determined criteria. The equity portion of the convertible bond issue is included in other reserves.

(ii)  £250 million fixed rate 8.75 per cent unsecured eurobonds 2016 are repayable in one instalment on 23 August 2016.

(iii)  Floating rate sterling mortgage loans are secured on specific aircraft assets of the Group and bear interest of between 0.53 per cent and 0.59 per cent above LIBOR. The loans are repayable between 2015 and 2019.

(iv)  Floating rate US dollar mortgage loans are secured on specific aircraft assets of the Group and bear interest of between 0.40 per cent and 0.99 per cent above LIBOR. The loans are repayable between 2011 and 2016.

(v)  Fixed rate sterling mortgage loans are secured on specific aircraft assets of the Group and bear interest at 6.14 per cent to 7.35 per cent. The loans are repayable between 2013 and 2016.

(vi)  Floating rate Japanese yen mortgage loans are secured on specific aircraft assets of the Group and bear interest of 0.55 per cent above LIBOR. The loans are repayable between 2014 and 2015.

(vii)  Floating rate US dollar mortgage loans are secured on certain plant and equipment of the Group and bear interest of 0.75 per cent above LIBOR. The loans are repayable in 2014.

(viii)  The fixed rate euro mortgage loan is secured on specific aircraft assets of the Group and bears interest of 1.58 per cent. The loan is repayable in 2024.

(ix)  Fixed rate US dollar mortgage loans are secured on specific aircraft assets of the Group. These loans bear an average interest of 4.55 per cent and are repayable in 2021.

(x)  European Investment Bank loans are secured on certain property assets of the Group and bear interest of between 0.20 per cent below LIBOR. The loans are repayable between 2014 and 2017.

d  Total loans, finance leases and hire purchase arrangements

  Group   Company
£ million 2010 2009   2010 2009
Loans:
Bank:          
US dollar $292 $178 $142 $178
Euro €73 €73  
Japanese yen ¥45,474 ¥6,915 ¥45,474 ¥6,915
Sterling £389 £427   £192 £217
£967 £600 £671 £391
Fixed rate bonds:
Sterling £517 £248 £517 £248

Loans from subsidiary undertakings:
         
US dollar   $150  
Euro       €300  
£366 £279
Finance leases:          
US dollar $1,777 $1,518 $1,777 $1,518
Euro €116 €77 €116 €77
Japanese yen ¥2,131 ¥2,131  
Sterling £915 £948   £1,095 £1,136
£2,206 £2,082 £2,386 £2,271
Hire purchase arrangements:          
US dollar $55 $72 $55 $72
Japanese yen ¥38,997 ¥101,350 ¥38,997 ¥101,350
Sterling   £62     £62
  £312 £833   £312 £833
At 31 March £4,002 £3,763   £4,252 £4,022

e  Obligations under finance leases and hire purchase contracts

The Group uses finance leases and hire purchase contracts principally to acquire aircraft. These leases have both renewal options and purchase options. These are at the option of the Group. Future minimum lease payments under finance leases and hire purchase contracts are as follows:

  Group   Company
£ million 2010 2009   2010 2009
Future minimum payments due:
Within one year 468 687 489 707
After more than one year but within five years 909 1,163 1,002 1,252
In five years or more 1,618 1,672   1,732 1,811
2,995 3,522 3,223 3,770
Less: Finance charges 477 607   525 666
Present value of minimum lease payments 2,518 2,915   2,698 3,104
The present value of minimum lease payments is analysed as follows:
Within one year 417 620 428 632
After more than one year but within five years 27 926 15 981
In five years or more 2,074 1,369   2,255 1,491
At 31 March 2,518 2,915   2,698 3,104

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